Prime City feedlot closure sign of the times

Jon Condon, 04/04/2012

The shock closure of one of the nation's largest feedlots is a sign of the times for the embattled Australian grainfed beef sector.

JBS Australia this afternoon confirmed that it has permanently closed its showcase Prime City feedlot located near Griffith in southern NSW.

The 35,000 head operational capacity feedlot is one of the most heavily-decorated grainfeeding businesses in Australia, having earned an unprecedented five industry Feedlot of the Year titles between 1998 and 2010.

The move, confirmed by JBS senior management this afternoon, ranks as easily the largest feedlot closure in Australian history. The company said the business would not be put on the market. 

The Prime City facility is regarded as one of the more modern large-scale feedlots in the country, having been built to modern specification only in 1994-95 by former owner, Australia Meat Holdings. The business holds a licence for 60,000 Standard Cattle Units, but is currently constructed for 35,000 head.

In concert with the general trends being seen across the industry, there has been some adjustment in feeding programs at Prime City over the past few years, with greater emphasis on 100-150 day programs, and less on 200-days plus cattle.

Under the JBS strategy, all the finished cattle from Prime City were trucked north for slaughter at the company’s dedicated grainfed Beef City plant near Toowoomba.

JBS plans to continue to farm the 5200ha of arable country surrounding the feedlot, both irrigated and dryland.         

As Beef Central’s regular trading budget calculations show, there have been some savage losses recorded in grainfeeding cattle over the past year or two.

“International conditions for grainfed beef have been challenging, and will continue to be so, and we have made a commercial decision,” JBS Australia director John Berry said this afternoon.

“With the challenges we currently face in the grainfed business, we have the platform to expand our grassfed processing operations,” Mr Berry said. “We have an excellent grassfed platform on which to build.” 

Mr Berry said JBS would continue to run its remaining feedlots – Riverina, near Yanco (53,000 head); Caroona, near Tamworth (24,500 head); Mungindi, near the Qld/NSW border (12,000 head); and Beef City, Toowoomba (26,000 head) as close to maximum utilisation as possible.
Utilisation levels were important in optimising feedlot efficiency, he said. 

The closure of Prime City follows a decision to close JBS’s Yambinya feedlot (13,000 head operating capacity) in NSW during October last year. Yambinya has since been put on the market, but has failed to find a buyer.

In combination, the closures reduce JBS’s feeding capacity across eastern states by almost 50,000 head, plus 25,000 lamb.

In a notice to the market this afternoon, JBS SA formally confirmed its management restructure affecting the Australian and US operations. The changes were covered in detail in Beef Central’s articles “New regional heads in JBS management restructure” on February 6 and “Exclusive: Mars moves on in JBS senior management changes” on January 28.

During today’s advice to market, JBS SA also announced the appointment of Denilson Molina as chief financial officer of JBS USA (includes Australia).

Mr Molina is 43 years old, holds a degree in mathematics from Unimep Brazil and an MBA in Management and Marketing from PUC/RJ. He joined the company in 2011 having worked for Banco de Brasil for 18 years, occupying various leadership positions. He will report directly to Don Jackson, CEO of JBS US.   

  • Beef Central’s latest trading budget summary, compiled only yesterday, suggested a $20 loss on 100-day cattle entering the feedlot now and exiting in the third week of July. Read the report here.


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